Paulson of the Federal Reserve said that monetary policy needs to be “somewhat restrictive.” The exact path of interest rate policy depends on how the economy evolves. Further “gradual” rate hikes are appropriate in view of high inflation. Progressive rate hikes have also provided room for Federal Reserve officials to assess the impact. The risk to the inflation outlook is high. The economy is stronger than expected, and the job market is stable. The Federal Reserve still has “more work to do” to reduce inflation.

Paulson of the Federal Reserve said that monetary policy needs to be “somewhat restrictive.” The exact path of interest rate policy depends on how the economy evolves. Further “gradual” rate hikes are appropriate in view of high inflation. Progressive rate hikes have also provided room for Federal Reserve officials to assess the impact. The risk to the inflation outlook is high. The economy is stronger than expected, and the job market is stable. The Federal Reserve still has “more work to do” to reduce inflation.